Term Life Insurance
Term life insurance is typically the most affordable option for covering temporary financial obligations. If you have specific debts such as a mortgage or a child’s college education, term life can provide the necessary financial safety net.
Recommendation: We recommend considering a term policy that converts into a whole-life policy. By setting up the plan to convert after the term or during the term. You can ensure protection beyond one season of life without requiring additional underwriting.
Types of Term Life Insurance
Level Term Insurance: This is the most common type of term insurance, where both the death benefit and the premium remain constant throughout the term, which can range from 10 to 30 years.
Yearly Renewable Term (YRT) Insurance: This policy allows for annual renewal without requiring proof of insurability. However, premiums increase each year as the insured ages, making it potentially more expensive over time.
Decreasing Term Insurance: The death benefit decreases over the policy term, often used in conjunction with debt repayment schedules like mortgages. Premiums remain level throughout the term.
Return of Premium (ROP) Term Insurance: This type refunds the premiums paid if the policyholder outlives the term. While it provides a refund, the premiums are generally higher than standard term policies.
Convertible Term Insurance: This allows the policyholder to convert the term policy into a permanent life insurance policy without undergoing a medical exam, typically during a specified period.
Adjustable Premium Term Insurance: This type allows insurers to offer insurance at lower current premiums with the right to change these premiums in the future, although they cannot exceed the maximum guaranteed premiums stated in the policy.
Types of Underwriting
Term life insurance underwriting can be categorized into several types, each with different requirements and processes:
Fully Underwritten Term Insurance
Requires a medical exam and a comprehensive application process.
Applicants provide detailed health, family history, lifestyle, and hobby information.
These policies are often the least expensive because the insurer collects extensive information to accurately assess risk.
Accelerated Underwriting
Does not require a medical exam.
The application includes some health questions, and the insurer uses third-party data, such as prescription drug history, to make decisions.
If the data reveals red flags, the applicant may need to undergo full underwriting with a medical exam.
Simplified Issue Term Insurance
Does not require a medical exam.
Applicants answer a limited number of health-related questions, and a "yes" answer to certain questions may lead to denial.
Insurers may use third-party data to assist in decision-making.
Guaranteed Issue Term Insurance
No medical exam or health questions are required.
Applicants cannot be turned down, making it accessible to those with health issues.
This is often the most expensive type of term insurance due to the lack of underwriting and increased risk for the insurer.
Options
There are a wide variety of options available with Term Life Insurance. Every carrier is unique. We partner with over 130 different Term Life carriers with a variety of useful options.
Disability Income
This rider provides a monthly income benefit if the insured becomes disabled and is unable to work. The benefit continues until the end of a predetermined period, the insured returns to work, or passes away. The eligibility for this rider depends on factors like age, health status, and occupation.
Waiver of Premium
This rider waives the premium payments if the insured becomes permanently disabled or loses their income due to injury or illness. It ensures that the life insurance policy remains in force without requiring the policyholder to pay premiums during the period of disability
Return of Premium at end of term
Refunds the premiums paid if the policyholder outlives the term of the policy, providing a savings component to term insurance.
Convert to a permanent policy
Allows the policyholder to purchase additional coverage at specified times without undergoing further medical underwriting, useful for adapting to life changes like marriage or having children
Accidental Death Benefit
Provides an additional payout if the policyholder's death is due to an accident, increasing the overall death benefit for beneficiaries
Accidental Death Benefit
Provides an additional payout if the policyholder's death is due to an accident, increasing the overall death benefit for beneficiaries
Disability Waiver of Premium
Waives premium payments if the policyholder becomes totally disabled and unable to work, ensuring the policy remains in force without financial strain.
Long-Term Care
Provides funds for long-term care expenses if the policyholder requires assistance with daily living activities, often available on permanent policies.
Family Income Benefit
Ensures that beneficiaries receive a steady income for a specified period after the policyholder's death, rather than a lump sum
Critical Illness
Offers a lump sum payment if the policyholder is diagnosed with a critical illness such as cancer or heart disease, helping cover treatment costs.
Chronic Illness
Provides access to a portion of the death benefit if the policyholder is diagnosed with a chronic illness requiring long-term care